Don't Sell Your Financial Advisory Business for Less Than You Could

By David H. Hern via

Too many financial planners and other personal finance advisers fail to get the best value on businesses that they may have spent decades building up. Here are some thoughts on how to avoid joining them.

Timing and your approach to valuation are the most common issues in the exit planning process for financial advisory businesses. As an independent financial advisor your “book”, practice or business is the largest and most valuable asset you own.

According to David Grau of FP Transitions, approximately 70% of independent financial advisors are defined by the value of their client relationships to the extent that they are simply known as “books”. They are most likely to sell not only at the lowest price but also the worst commercial terms such as tax structure. Currently, only 1 in 10 advisors successfully sell externally, leaving an incredible 8 out of 10 advisors ultimately choosing some form of attrition where the advisors book of business dies but not before throwing off an extra 5 to 10 years of gradual declining cash flow to the owner.

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